Answers26-27 Ignite Economics-KY-EconomicsCase Study: Starting a Business

Case Study: Starting a Business Answers

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The chart shows a production possibilities schedule for Sabrina’s Soccer. Stan’s Sporting Goods is a competitor that can manufacture seven soccer balls out of a possible ten, if it makes one soccer net. Which statement correctly compares the two businesses?

Question illustration
A
Sabrina’s Soccer has a comparative advantage over Stan’s Sporting Goods because Sabrina’s Soccer has a lower opportunity cost.
B
Stan’s Sporting Goods has a comparative advantage over Sabrina’s Soccer because Stan’s Sporting Goods has a lower opportunity cost.
C
Sabrina’s Soccer has an absolute advantage over Stan’s Sporting Goods because Sabrina’s Soccer has a lower production cost.
D
Stan’s Sporting Goods has an absolute advantage over Sabrina’s Soccer because Stan’s Sporting Goods has a lower production cost.
2
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The chart shows a production possibilities schedule for Sabrina’s Soccer. If the market for soccer balls is saturated and the market for soccer nets is open, which combination makes the most sense for Sabrina’s Soccer?

Question illustration
A
A
B
C
C
D
D
F
3

The graph shows a production possibilities curve for Sabrina’s Soccer. At which point on the graph are resources not used efficiently?

Question illustration
A
point A
B
point F
C
point X
D
point Y
4

The graph shows the marginal cost of producing soccer cleats for Sabrina’s Soccer. At which level of production does the company make the least profit?

Question illustration
A
the first pair of cleats
B
the second pair of cleats
C
the third pair of cleats
D
the fourth pair of cleats
5

The chart shows a production possibilities schedule for Sabrina’s Soccer. If Sabrina’s Soccer makes three nets, how many balls can the company produce?

Question illustration
A
2
B
4
C
6
D
8
7

The chart shows a production possibilities schedule for Sabrina’s Soccer. Which statement correctly explains the chart?

Question illustration
A
The opportunity cost of producing one soccer net is eight soccer balls.
B
The opportunity cost of producing two soccer nets is two soccer balls.
C
The opportunity cost of producing two soccer balls is one soccer net.
D
The opportunity cost of producing four soccer balls is three soccer nets.
8

The graph shows a production possibilities curve for Sabrina’s Soccer. At which two points will Sabrina’s Soccer produce the most equal amounts of soccer balls and soccer nets?

Question illustration
A
points A and B
B
points C and D
C
points E and F
D
points X and Y
9

What is the difference between absolute advantage and comparative advantage?

A
Absolute advantage is the ability to produce a good or a service at a lower production cost than competitors. Comparative advantage is the ability to produce a good or service at a lower opportunity cost than competitors.
B
Absolute advantage is the ability to produce a good or a service at a lower opportunity cost than competitors. Comparative advantage is the ability to produce a good or service at a lower production cost than competitors.
C
Absolute advantage is the ability to sell a good or a service at a lower price than competitors. Comparative advantage is the ability to sell a good or service at a higher price than competitors.
D
Absolute advantage is the ability to sell a good or a service at a higher price than competitors. Comparative advantage is the ability to sell a good or service at a lower price than competitors.
10

A survey of hobbies and purchases can help a producer

A
assess demand to choose a business.
B
identify the marginal benefit to make a profit.
C
decide the production costs to make a good.
D
determine the remaining supply to lower costs.

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